Nokia and Microsoft Partner

Nokia has a new CEO and they just announced a partnership with Microsoft today. As the mobile industry expands, we have seen the old school Nokia phones drop significantly in the popularity rankings. Everyone is leaning towards iPhones, Blackberrys, and Android over a Nokia. Needless to say, the worlds largest mobile producer is hurting and hurting bad.

At the same time, Microsoft is planning to revive its plans of entering the mobile market after a quasi-failed attempt with the Windows Mobile platform many years back. Hence, it seems like a natural partnership where Microsoft will provide the software and Nokia will provide the hardware.

Industry analysts are clearly not impressed with a drop in Nokia share prices of over 13% today but they might be overreacting. The reality is that Nokia will be more competitive than ever now. With access to a real software system and a large user base, Nokia handsets will certainly be more popular now than in the past with their proprietary OS (NOS).

The real question is why Nokia chose Microsoft and not Android. Android is already growing fast (fastest growth of any mobile OS) and is a serious threat to overtake iOS. My take on this is that Nokia has a need for exclusivity. Android is open for business to almost any handset provider while Microsoft is still a more exclusive system. In partnering with Microsoft, Nokia is hoping that the Microsoft Phone 7 operating system will be in such high demand that users are willing to purchase their phones just for access to the OS. Certainly a very risky outlook but at the very least, Nokia is no worse off than before.